One Equity Partners has completed its $75 million investment into ArthroCare Corp. (OTC BB: ARTC), an Austin, Texas-based maker of minimally-invasive surgical products. The investment was be in the form of newly-issued Series A convertible preferred stock, convertible into common stock at $15 per share.
ArthroCare Corp. (Pink Sheets: ARTC) today announced that it has closed its previously announced financing with One Equity Partners (OEP), the global private equity investment arm of JPMorgan Chase & Co.
In connection with the financing, OEP has purchased $75 million of newly-issued ArthroCare Series A Convertible Preferred Stock, which will be convertible into shares of ArthroCare common stock at $15.00 per share, a premium over the closing price of the Company’s common stock on August 14, 2009 and the 30-day trading average. Cumulative dividends on the ArthroCare preferred stock will be payable-in-kind at an annual rate of 3.0% for five years after the preferred stock is issued, and a make-whole adjustment will apply if OEP elects to convert its shares before September 2014. Upon the close of the transaction today, and in conjunction with OEP’s investment, Chris Ahrens and Greg Belinfanti, both Partners of OEP, will join ArthroCare’s Board of Directors.
Mr. Ahrens, age 33, is a Managing Director of OEP and, prior to joining OEP in 2001, worked at Goldman Sachs. He currently serves on the Boards of Carlson Wagonlit Travel, Systagenix Wound Management, Travel Leaders Group and Vertrue. Mr. Ahrens received his A.B. from Princeton University.
Mr. Belinfanti, age 34, is a Managing Director of OEP and, prior to joining OEP in 2006, served as a Vice President in the Investment Banking division of Lehman Brothers, specializing in Global Healthcare. Mr. Belinfanti serves on the Boards of Apollo Health Street, Prodigy Health Group and Systagenix Wound Management. Mr. Belinfanti received his B.A. from New York University and his J.D. from Harvard Law School.
In conjunction with the closing of the financing, ArthroCare has repaid all obligations under the Company’s Credit Agreement and expects to use the remaining portion of the proceeds for general corporate purposes. Additionally, all rights and obligations under the Credit Agreement are being terminated and all security interests and other encumbrances are being released, other than the Company’s obligations with respect to a letter of credit issued in favor of a lender affiliate under the Credit Agreement in the amount of €750,000, which will be cash collateralized in the approximate amount of $1.4 million.
Founded in 1993, ArthroCare Corp. is a highly innovative, multi-business medical device company that develops, manufactures and markets minimally invasive surgical products. With these products, ArthroCare targets a multi-billion dollar market opportunity across several medical specialties, significantly improving existing surgical procedures and enabling new, minimally invasive procedures. Many of ArthroCare’s products are based on its patented Coblation® technology, which uses low-temperature radiofrequency energy to gently and precisely dissolve rather than burn soft tissue — minimizing damage to healthy tissue. Used in more than four million surgeries worldwide, Coblation-based devices have been developed and marketed for sports medicine; spine/neurologic; ear, nose and throat (ENT); cosmetic; urologic and gynecologic procedures. ArthroCare also has added a number of novel technologies to its portfolio, including Opus Medical sports medicine, Parallax spine and Applied Therapeutics ENT products, to complement Coblation within key indications.
ABOUT ONE EQUITY PARTNERS
Established in 2001, One Equity Partners manages $8 billion of investments and commitments for JPMorgan Chase & Co. in direct private equity transactions. One Equity Partners has invested in over 30 companies in a variety of industries including defense, chemicals, healthcare, technology and manufacturing. One Equity Partners’ investment professionals are located across North America, Europe and Asia, with offices in New York, Chicago, Menlo Park, Frankfurt and Hong Kong. Visit http://www.oneequity.com/ for more information.